Road User Charging - A Nationally Consistent 21st Century Approach.

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Light vehicle transport is an essential component of the Australian lifestyle providing on demand private transport to most Australians enabling high levels of independence and autonomy as well as supporting diverse business operations. 

However, as we progress as a society there are several issues that need to be addressed:

1. Australia’s population is growing and concentrated in cities and suburban areas.

2. Traffic congestion is an increasing problem resulting in various societal issues such as:

a. Increasing travel times;

b. Productivity decrease; and

c. Emission concentration and associated health issues.

3. Road Safety “Towards Zero” results plateauing requiring step change.

4. Fuel excise is the primary automotive taxation revenue is reducing in per vehicle terms.

5. Complex, inefficient and increasingly fragmented automotive taxation measures and proposals across Governments.

At the same time the automotive industry is changing in dramatic ways and is leading far reaching technological and engineering developments arguably ushering in a generational change in automotive transport solutions for Australians as well as motorists around the world. These trends can be broadly summarised as follows:

• Vehicle Connectivity and Digitalisation

o Connected vehicles are commencing entry into the market;

o Cooperative Intelligent Transport Systems (C-ITS) introduction shortly.

• Powertrain electrification through various leading technologies including:

o Hybrid Vehicle (HV);

o Plugin Hybrid Electric Vehicle (PHEV);

o Battery Electric Vehicles (BEV); and

o Fuel Cell Electric Vehicles (FCEV).

• Increasing levels of:

o Driver Assistance Systems;

o Vehicle Advanced Driver Assistance Systems (SAE L2 +); and

o Progressing towards vehicle automation (SAE L3 +).

Increasingly we are seeing connected vehicles entering the marketplace. Connected vehicles enable vehicles to connect externally with their environment through the mobile network system, either with an embedded Subscriber Identity Module (SIM) or by tethering to the consumer’s mobile phone. To a large extent, manufacturers are creating connected features that can enhance the user experience, similar if you like to the evolution of the mobile phone being more than just a tool to make phone calls on. It is this level of connectivity that gives rise to the potential for recording distance travelled and the capability to consider distance-based road user charging.

By way of background, Australia has largely harmonised vehicle regulations with the United Nations Economic Commission for Europe and has to a significant degree followed their vehicle safety developments.

In parallel, automotive related revenue and particularly fuel excise is reducing in per vehicle resulting in a diminishing source of revenue with which to fund amongst other priorities road transport infrastructure and maintenance. This is being exacerbated by increasingly fuel-efficient vehicles as well as the progressive electrification of the light vehicle fleet.

There are numerous automotive related taxes and charges at most levels of government that are inefficient and, in many cases, dampen consumption whilst not being relative to the usage of the vehicles and the impact on the infrastructure that they utilise.

It is these developments that provide Governments with a considerable opportunity to harness and combine the advantages of a number of these megatrends. Planning for the introduction effectively provides a unique opportunity to address several societal issues;

 Commence the phasing out of fuel excise with the introduction of road user charging across all vehicles regardless of powertrain choice.

 Address traffic congestion in the key inner-city areas by introducing congestion charging which could be introduced in several ways, Gantry style using e-tags and or Automatic Number Plate Recognition (ANPR) cameras.

 Addressing traffic congestion by utilising pricing controls that encourage consumer behaviour to make considered choices in areas of high demand particularly during peak periods.

o Reducing congestion which has many on flow effects such as:

 Lower concentrated and localised emissions;

 Lower noise pollution.

 Improve road safety, reduce death and trauma on Australian roads through reduced congestion:

o Reduce the health and associated costs resulting from road death and trauma

 Improved traffic flow across the city through smart navigation combined with smart infrastructure improving productivity and efficiency.

 Newer electrified powertrains associated with connected vehicles that minimise or eliminate noxious gas emissions in use can contribute considerably to positive environmental outcomes and associated benefits.

 Improve cities liveability through a multitude of benefits.

 Simplify and automate taxation revenue generation.

 Improve consumer confidence through a nationally consistent and considered approach.

Connected vehicles provide a once in a generation opportunity to utilise these systems to support Road User Charging (RUC) to become a practical reality. It will be possible for the vehicle using connectivity to communicate:

 the distance travelled – embedded or tethered vehicle connectivity

 the specific locations of travel where additional road user charges are to be variably applied to minimise congestion (location-based Congestion Charging) through e-tags or ANPR.

There will be challenges:

 Introducing a road user charging system would require a great deal of cooperation and coordination between all levels of Government. However, it will progressively result in a stable, reliable and increasing revenue stream with market expansion over time that could be beneficial to consumers as well as to all Governments.

 From a Government perspective there is significant opportunity to reduce a range of inefficient Federal and State taxes and charges along with the administration reduction and associated cost savings that will result – this could provide the win-win solution.

 From a consumer perspective we need to create benefit from this change otherwise this will be seen as a new tax on technology – which may result in consumers avoiding the technology.

 A Nationally consistent scheme would provide consumer confidence and administration simplicity leading to acceptance if applied appropriately and equitably.

In an overall context, there should be no reason why a well-designed road user charge could not achieve the following:

 Simplify and automate taxation.

 Reduce congestion and improve road safety as a result.

 Promote economic efficiency and as a result;

o Most pay no more.

o Some light users will pay less.

o Motor vehicle users travelling to and from the city could pay more – this will reduce congestion and becomes variable in the future according to demand (if congestion charging introduced).

 Cities will generally become more liveable.

 Health benefits for people in and around the major city centres.

o Continue advancing the electrification of the fleet with associated emission reduction benefits by not selectively applying Road User Charges and dampening demand.

A properly designed Road User Charging system should be introduced in a nationally coordinated and consistent manner that provides certainty for the public as well as the automotive manufacturers designing the in-vehicle systems that will be required to operationalise any system.

Road User Charging should be applied to all vehicles in line with the general Road User Charge - principles (refer to Section 10 iii) and not be allowed to be to be targeted to specific technologies that could potentially distort free market operation or in the worst, reduce uptake by damaging consumer confidence.

Finally, it is important to remember that manufacturers are currently prioritising supply of advanced automotive products with electrified powertrains for markets where governments put policies in place that support the introduction of these technologies.

It is also possible to consider a phased approach which allows for a transition over time:

 Older vehicles that are not connected will continue to use petroleum fuels and contribute to revenue through fuel excise and various other taxes and charges.

 Newer vehicles with connectivity can utilise the Road User Charging system amalgamating the various taxes and charges.

 For congestion charging, either utilise gantry style systems with e-tag technologies or utilising ANPR systems.